Ourcrowd investing offers investors simplicity when they invest in start-ups that that lack the expertise to establish connections with relevant venture capitalists.
Ourcrowd was created in 2013 by venture capitalist and angel investor Jonathan Medved with an objective to make an investment platform for accelerated investors, institutions to invest in startups.
Since the establishment of the company, it has been recognized by various awards. In the year 2014, ranked 22 out of 50 best innovative fintech companies.
Furthermore, In the year 2015 OurCrowd was ranked 23 out of 24 in Forbes list of “Israeli Companies to watch”.
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Founded |
2013 |
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Investment Type |
Venture, Startups |
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Sectors |
Fintech, Cyber, AI, MedTech, and BidData |
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Minimum Investment |
$10K |
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Audience |
Open to accelerated investors, institutions |
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Investor Fees |
● Management fees ● Carried interest fees ● Administrative fees |
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Due Diligence Process |
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Securities Offered |
Equity, Funds |
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Investor Resources |
Company documents, blogs, One to one interaction with employees |
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Pros |
● Offers investment options to invest in individual startups as well as funds ● Effective diligence process ● In the market for more than 8 years ● OurCrowds give its investors unrivaled transparency ● OurCthatrowds provide opportunities for anyone and everyone with knowledge and interest in venture capital investing |
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Cons |
● Offers investment opportunities to accelerated investors and institutions only ● High risk and low liquidity based investments ● The minimum investment amount required is high |
Types of Investments OurCrowd offers
OurCrowd offers three types of investment opportunities to its investors –
- Internally managed funds
- Rule-Based funds
- Third-party funds
As mentioned by the company that these funds range from small micro funds with a very specific sector focus to large Silicon Valley-based venture funds with a generalist strategy.
OurCrowd offers investment opportunities to its investors based on their needs but majorly focuses on technology-based companies. OurCrowd offers three levels of investments –
- Introductory opportunity – Startup select
- Premium opportunities – Fund Reserve, Portfolio Reserve
Startup select
Startup select is a free investment account on the platform. It required a minimum investment of $10,000. You can make an account front the website of the company and can access new offerings listed on their platform.
Portfolio Reserve
Portfolio Reserve is a premium account on the platform and requires a minimum investment of $50,000 and offers the option to choose individual investments to diversify the portfolio as an investor wishes to do.
What do you get when investing with Ourcrowd?
Investors like you will get a share in equity on individual offers or funds as they were invented. If the company grows and goes for IPO you will able to trade in secondary markets also.
How does the company make money?
The major source of revenue for OurCrowd is fee charges by them (Individual offerings) –
- Management Fee – 2% per annum for four years (8% in total)
- Administrative Fee – 4% fee to reimburse directly the SPVs expenses. It was a one-time fee and deducted from the investor’s account when it occurred
- Carried Interest Fee – 20% of profits up to 5 times of invested principal amount. Furthermore, Proceeds above 5x of the amount invested will be subject to carried interest at a rate of 25%.
For Funds, the fee ranges between 1.5% to 2.5% over the period of time till you withdraw.
Potential Returns and Cashflow
OurCrowd offers investing option to invest in startups and growing companies. Startups are considered a high-risk investment as they will be become a big giant or end up closing their operations.
If the companies grow your investment can get returns up to 100 times or even more.
Considering cash flow investing in startups through OurCrowds is not the best option for you. In the case of Startup selection, the average period of investment is around 7 years and 10 years for funds.
If you accept a good cash flow from your investment you should consider other options like stocks, mutual funds because startups generally need an average of 5 to 8 years to establish themselves as a brand and it locks your capital for that period.
The Breadth of offerings
Deal flow of the company
OurCrowd selects the companies after thorough analysis and background checks. OurCrowd acceptance rate ranges between 1% to 2% from 4000 companies applied last year. On average 2 to 3 offerings were made each month.
Companies offered – Sector, Company, and Number
As mentioned by the company on the website “OurCrowd is sector, stage, and geography agnostic. We invest in a range of sectors ranging from Agriculture, Consumer, Cybersecurity, Energy, Enterprise, FinTech, Healthcare, Mobility, and more”.
Regulatory Framework
OurCrowd made all their offering under SEC RegD which requires investors to be with a status of the accelerated investor.
When you signup to OurCrowd you will be able to access investment reports, company analyses prepared by OurCrowd.
Furthermore, you will receive quarterly reports of the companies in which you will be invested containing updates on company progress and estimated matrics. The invested investor will also receive a monthly digest related to invested companies of investors.
Due Diligence Process
OurCrowd’s vetting process is comprised of five phases:
Initial contact: 150-200 companies/month have initial contact with OurCrowd’s investment team and are vetted accordingly.
Scheduled meetings: OurCrowd schedules initial pitch meetings with potential startups.
Due diligence: Various diligence meetings take place to dive further into the analysis.
Investment committee: The startup is presented to OurCrowd’s senior investment committee for a final decision.
Fundraising: Once the term sheet is signed, the startup is added as an investment opportunity on OurCrowd’s website platform. Expect closing to occur anywhere between 45-60 days from launch.
Conclusion
OurCrowd mainly focuses on listing excellent startup ideas which can flourish in long term. But startups are always termed as a high-risk investment with lower liquidity.
Investing in a startup is a risk game especially for beginners who are not ready for these types of fluctuations. If you are a beginner I would suggest you go with stocks, mutual funds with higher liquidity.
If you are an experienced investor and want to diversify your portfolio it can be a go-to option for growing your wealth.